Author Topic: DON'T pay off your credit cards club  (Read 9581 times)

Pizzabrewer

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DON'T pay off your credit cards club
« on: May 02, 2018, 08:42:57 AM »
Last year I wanted to ramp up our retirement savings, starting around July.  I boosted my 401k withholdings to 60% (the max my company would allow) and my wife boosted hers to almost 70%.

This left us with very little take-home pay to live on.

We had started cc hacking earlier in the year and had a slew of cards still at the introductory 0% rate.  So we put everything we could on these (alas, not including the mortgage) and ran up almost $20k in cc debt.  The positive side to this is our contributions to our retirement during this period were well over $30k.  Plus we got some pretty sweet cc bonus dollars.

The 0% rate expired recently on those cards.  Lo and behold, BofA had a timely offer for a new cc, $0 balance transfer fee and 0% interest for (I think) 15 months.  PNC also came through with an offer on my old, unused Visa card:  2% balance transfer fee and 0% interest for a similar period.

So I utilized these to the tune of about $16k.  As long as we make the minimum monthly payment (which appears to be 1% of the balance), they will continue lending us this money for free.

I don't see this discussed much here.  Probably due to the danger of missing a payment and getting your rate jacked up to 20% or more.  But as Mustachians we have our shit together, no?

Anyone have an epic cc story?

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #1 on: May 02, 2018, 08:53:48 AM »
Oh, and one other benefit.  Thanks to our hefty retirement savings (401k, IRAs and HSA) our AGI was reduced enough to qualify for the saver's credit.  Our federal tax owed for 2017 was $0.

All largely thanks to the generosity of the credit card companies.

BlueHouse

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Re: DON'T pay off your credit cards club
« Reply #2 on: May 02, 2018, 11:15:36 AM »
Anyone have an epic cc story?

Sadly, many of us do...that's why we're here. 

brute

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Re: DON'T pay off your credit cards club
« Reply #3 on: May 02, 2018, 11:18:19 AM »
Nice work!

I wasn't able to completely pay off one of my cc's one month back in 2008. It had a balance of maybe $120. I paid it off the next month. That's the best story I've got for debt of any kind.

lexde

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Re: DON'T pay off your credit cards club
« Reply #4 on: May 02, 2018, 12:17:14 PM »
Are these 0% balance transfers without any other associated fees? I’ve had some offers for 0% but there’s always a transfer fee which ends up being 2-3% and rendering the whole thing moot.

And if so can you balance transfer multiple cards to one card? I.e. I can make 2-3 minimum spends on multiple cards, then transfer each of those balances to the one 0% card? That would be a nice way to kill multiple birds with one stone.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #5 on: May 02, 2018, 03:01:13 PM »
Are these 0% balance transfers without any other associated fees? Iíve had some offers for 0% but thereís always a transfer fee which ends up being 2-3% and rendering the whole thing moot.

And if so can you balance transfer multiple cards to one card? I.e. I can make 2-3 minimum spends on multiple cards, then transfer each of those balances to the one 0% card? That would be a nice way to kill multiple birds with one stone.

Yes, as stated above the BofA offer was for $0/0% transfer fee and 0% interest.  The PNC offer was for 2% transfer fee (the lowest I'd seen other than the aforementioned BofA offer) and 0% interest.  The only reason I didn't transfer the whole amount to the BofA card was the credit limit they gave me.  So $4200 of the transfers went to PNC at 2%.  Still a great deal.

And yes you can transfer multiple balances.  We consolidated the balances on 4 cards to these two.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #6 on: May 02, 2018, 03:04:01 PM »
Anyone have an epic cc story?

Sadly, many of us do...that's why we're here.

Ha.  I think you're talking of a "bad" epic story.  I'm advocating using the cc companies' offers to our benefit.  I know credit card debt has a horrible reputation, but a $16k loan at 0% interest for 15 months, why wouldn't you??  I have the cash to pay them off in full, but that would be foolish. 

lexde

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Re: DON'T pay off your credit cards club
« Reply #7 on: May 02, 2018, 06:31:39 PM »
I applied for the Amex EveryDay card with $0 fee and 0% APR for 15 months. I got a $25K limit, but only a $7,500 balance transfer limit. DAMN. :-(

v8rx7guy

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Re: DON'T pay off your credit cards club
« Reply #8 on: May 02, 2018, 11:53:26 PM »
This seems like a terrible idea to me.  How long will it take before you run out of 0% interest balance transfer options?  Then what?  You pay it off quickly?  You draw from the savings accounts that you deferred money into earlier?  What happens if during this (lets just say) 2  year time frame, the market goes down significantly?  Then you're either paying it back with investments that are now worth less when you put them in, or paying with money that could be catching the next upswing in the market.  This sounds like an fools game to be borrowing on a credit card to pump up your savings rate.

Car Jack

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Re: DON'T pay off your credit cards club
« Reply #9 on: May 03, 2018, 07:23:47 AM »
The potential horror story of it all is if you miss a payment and then interest is charged from the very beginning and with $20k sitting there for a year, you're hit with a 20%, $4000 interest charge.

v8rx7guy

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Re: DON'T pay off your credit cards club
« Reply #10 on: May 03, 2018, 10:19:27 AM »
The potential horror story of it all is if you miss a payment and then interest is charged from the very beginning and with $20k sitting there for a year, you're hit with a 20%, $4000 interest charge.

This too.  So many things wrong with this "accumulate credit card debt to invest more" scheme.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #11 on: May 03, 2018, 11:15:19 AM »
Ha!  I knew this post would draw plenty of "what-if-isms".

Credit card debt = always bad.  Right?

Wrong.

Like I said above, if you have your shit together you won't miss a payment.  I have several options going forward (14 months from now, a virtual eternity in planning terms) to pay off the debt or roll it into another 0% situation.

Taking advantage of an interest-free loan, that's a good thing if you know what you're doing.  Y'all gotta get over the (in most cases justified) hate for cc debt.

Me, I'll take the free money.

Boo-yah.
« Last Edit: May 03, 2018, 11:18:40 AM by Pizzabrewer »

Still Being

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Re: DON'T pay off your credit cards club
« Reply #12 on: May 03, 2018, 12:05:27 PM »
In the long-term with credit cards there is more risk involved than other types of debt, which requires a greater return for it to be worth it. This is why there will be more criticism of this idea. Leverage is good, but credit card debt is risky due to the necessity of a 0% offer being available elsewhere, having the cash on hand to pay off at any point if no other offer is available, and carrying it on your report will affect your credit score (balances on revolving accounts).

I'm 26 years old and have moved around about $6,000 every year at 0% which has been worth it for the opportunity to travel on amazing trips like hiking the Appalachian Trail, and doing a yoga teacher training in Bali, even with entry-level income, and now that I've progressed in my career it is much more manageable and not necessary to carry this debt anymore. It takes discipline and awareness to do this effectively, and you have to know when it's time to move on.

BlueHouse

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Re: DON'T pay off your credit cards club
« Reply #13 on: May 03, 2018, 01:49:08 PM »
Anyone have an epic cc story?

Sadly, many of us do...that's why we're here.

Ha.  I think you're talking of a "bad" epic story.  I'm advocating using the cc companies' offers to our benefit.  I know credit card debt has a horrible reputation, but a $16k loan at 0% interest for 15 months, why wouldn't you??  I have the cash to pay them off in full, but that would be foolish.
Yeah, I get it.  I don't even have mileage cards (although I do have 2 "cash-back" cards).  Everything else takes too much energy and I'd rather spend that time and focus on something with a much greater reward -- work!   Some people have the desire (and time) to chase these rewards.  I don't, so the chance of missing a payment due to the churn would be greater.  Good luck to you though.

talltexan

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Re: DON'T pay off your credit cards club
« Reply #14 on: May 03, 2018, 01:59:09 PM »
I've gotten into this situation because I'm stubborn, and don't do a budget or optimize as well as I could (I'm half-ass, rather than badass).

It's silly with the net worth my wife and I have (passed $1 mill last year) that we have these little debts, yet we're here because I don't want to sell investments and time things. A couple of words of advice:

1. Transfer balances EARLY in the billing cycle. especially with Chase, it seems to take days for the balance to move to the next card, and you don't want to tack on late fees.
2. Make sure you're logging onto the website of your card issuer every month. B of A changed my minimum payment once, and it caused all sorts of fees/penalties.
3. It helps to have a "cross-ruff" where you're moving balances around between three different banks. At any time, I have floating balances with two out of three banks, so there's always a card at $0 that's ready for the next move.
4. Remember that these credit cards are CALLABLE. This doesn't matter until suddenly it does.
5. Be aware of the places in your life that are effectively interest free: tax returns, bonuses, other spikes in expenses/income, like planned charitable giving (my wife and I contribute to our church throughout the year). Use these to try to pull ahead on the debt by contributing into investment accounts early in the year.

In my case, I've decided to think about these debts as "negative bonds", so I'm gradually paying them down now to try to trim my investment risk, with the idea that I can dramatically ramp the debt back up if a bear market suddenly appears.

Good luck!


I'm a red panda

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Re: DON'T pay off your credit cards club
« Reply #15 on: May 03, 2018, 02:00:39 PM »
In college I used to use 0% cash advances to invest in CDs, then pay the CC off before the rate changed.  It was just free money to earn interest on.

MsSindy

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Re: DON'T pay off your credit cards club
« Reply #16 on: May 03, 2018, 02:06:46 PM »
I've been CC borrowing to invest for the past 2.5 years to the tune of about $60k of rotating debt. I have 5 cards that I rotate.  I invest with Realty Shares (need to be accredited investor) and pick situations that net me 9 - 16% IRR (before CC fees).  Paying the 2 - 3% CC transfer fee +the yearly fee usually eats up about 3 months worth of profit, but since my rotations are 15 months, I'm still getting a year's worth of investments with borrowed money.

I have all CC set up on auto debit so I don't miss a payment.  Plus, I have a nice cash flow that should anything go awry, I can pay off the cards.  If I was living really tight, I wouldn't be comfortable trying this maneuver.  Also, if my only option to invest was the stock market, I wouldn't be comfortable (that's just me!).  I do realize that RS as a platform could go belly up, but it's a risk I'm willing to take for the nice returns on a portion of my overall portfolio.  I love seeing that "mailbox money" roll in every month.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #17 on: May 03, 2018, 02:34:44 PM »
I've been CC borrowing to invest for the past 2.5 years to the tune of about $60k of rotating debt. I have 5 cards that I rotate.  I invest with Realty Shares (need to be accredited investor) and pick situations that net me 9 - 16% IRR (before CC fees).  Paying the 2 - 3% CC transfer fee +the yearly fee usually eats up about 3 months worth of profit, but since my rotations are 15 months, I'm still getting a year's worth of investments with borrowed money.

I have all CC set up on auto debit so I don't miss a payment.  Plus, I have a nice cash flow that should anything go awry, I can pay off the cards.  If I was living really tight, I wouldn't be comfortable trying this maneuver.  Also, if my only option to invest was the stock market, I wouldn't be comfortable (that's just me!).  I do realize that RS as a platform could go belly up, but it's a risk I'm willing to take for the nice returns on a portion of my overall portfolio.  I love seeing that "mailbox money" roll in every month.

Now THAT'S the kind of epic cc story I was asking for!  Congrats on working the cc companies to your advantage.
« Last Edit: May 03, 2018, 02:44:27 PM by Pizzabrewer »

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #18 on: May 03, 2018, 02:39:57 PM »
I've gotten into this situation because I'm stubborn, and don't do a budget or optimize as well as I could (I'm half-ass, rather than badass).

It's silly with the net worth my wife and I have (passed $1 mill last year) that we have these little debts, yet we're here because I don't want to sell investments and time things. A couple of words of advice:

1. Transfer balances EARLY in the billing cycle. especially with Chase, it seems to take days for the balance to move to the next card, and you don't want to tack on late fees.
2. Make sure you're logging onto the website of your card issuer every month. B of A changed my minimum payment once, and it caused all sorts of fees/penalties.
3. It helps to have a "cross-ruff" where you're moving balances around between three different banks. At any time, I have floating balances with two out of three banks, so there's always a card at $0 that's ready for the next move.
4. Remember that these credit cards are CALLABLE. This doesn't matter until suddenly it does.
5. Be aware of the places in your life that are effectively interest free: tax returns, bonuses, other spikes in expenses/income, like planned charitable giving (my wife and I contribute to our church throughout the year). Use these to try to pull ahead on the debt by contributing into investment accounts early in the year.

In my case, I've decided to think about these debts as "negative bonds", so I'm gradually paying them down now to try to trim my investment risk, with the idea that I can dramatically ramp the debt back up if a bear market suddenly appears.

Good luck!

Good advice, thanks. Yes I noticed how long it takes for these transfers to process. It's not a last-minute thing to do for sure. And yes you need to keep on top of the accounts. I check them all at least once a week. I would hope anyone here is smart enough to pay attention (which eliminates the most common criticism of this strategy). Thanks again!
« Last Edit: May 03, 2018, 02:46:25 PM by Pizzabrewer »

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #19 on: May 03, 2018, 02:42:08 PM »
The potential horror story of it all is if you miss a payment and then interest is charged from the very beginning and with $20k sitting there for a year, you're hit with a 20%, $4000 interest charge.

This too.  So many things wrong with this "accumulate credit card debt to invest more" scheme.

Yup, if you don't trust yourself enough to keep current with your accounts then this isn't a strategy for you.

boarder42

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Re: DON'T pay off your credit cards club
« Reply #20 on: May 03, 2018, 02:43:09 PM »
@secondcor521 has an epic thread in another forum from back in the days when interest rates were really high for savings accounts and CDs and i think he managed to do like 250-500k rolling balances and think about the ROI on that level of free money with a guaranteed return. 

v8rx7guy

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Re: DON'T pay off your credit cards club
« Reply #21 on: May 03, 2018, 02:56:29 PM »
Isn't this scheme based on the fallacy that you will have a positive return (or more precisely a greater return than your balance transfer costs) on your investment over the short amount of time you can get away with zero interest credit using balance transfers? What I am saying that if you look at the S&P500 rolling returns for a 1, 2 or 3 year period, the likely horizon for what you're trying to do, there is not a small chance that you will return less than 2%.  I understand the churning part of it, but that doesn't require you to carry over a balance to achieve churning (aka you pay it off every month).  And the thread you are spinning of of "The DON'T pay off your mortgage club" also makes sense because mortgages are based on a very long payoff period (30 years?) where you can safely assume a 7% (or whatever you want to assume) ROI. 

Again, I ask, how long do you think you can get away with interest free credit, and how much in balance transfers is it going to cost you?


Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #22 on: May 03, 2018, 03:07:10 PM »
BofA was $0 balance transfer fee. Zero.  Zip.  Nada.  Amex currently has a similar offer. As I stated above I paid 2% on a fraction of the total. The blended fee worked out to 0.5% for 15 months.  About 0.4% per annum. With enough planning (14 months at this point, which as I said above a virtual eternity in planning terms) I expect to pay no transfer fees in the future. I doubt the idea of 0% balance transfers will go away in the next year or 2.  Or I could pay off the balance with cash on hand. But as long as the cc companies are willing to lend me the money for free, I'll be at the front of the line.

Did you miss the part where I said our increased 401k withholding thanks to this strategy lowered our 2017 federal tax to $0.00?  That has already more than returned the $84 balance transfer fee we paid.  In multiples.  Many multiples.

Clearly you hate this idea. I get it. It's not for you. But for me, I'll take the free money. It's all about working the angles to our advantage. Investment returns are immaterial. Zero percent money is zero percent money. Seems foolish to me to reject it because "evil cc companies" and "what-ifs".
« Last Edit: May 03, 2018, 09:12:36 PM by Pizzabrewer »

secondcor521

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Re: DON'T pay off your credit cards club
« Reply #23 on: May 03, 2018, 10:30:10 PM »
@secondcor521 has an epic thread in another forum from back in the days when interest rates were really high for savings accounts and CDs and i think he managed to do like 250-500k rolling balances and think about the ROI on that level of free money with a guaranteed return.

Ironically enough, I chronicled that story on a site named fatwallet, which has ceased operations.  I think it was over $500K at the most, and to address the concern of the poster immediately below boarder42, it was all stored in high yield savings accounts paying about 5% for about a year.  I don't recall the numbers but I think I cleared about $14K to $18K after the minimal fees.

The game changes over time, though.  That one is no longer feasible, but there are others out there.  When those go under, someone else will find another thing to exploit.

tomsang

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Re: DON'T pay off your credit cards club
« Reply #24 on: May 03, 2018, 10:59:35 PM »
Over the years I have used them a number of times with great success.  This post talks about using debt to increase wealth.

https://forum.mrmoneymustache.com/investor-alley/are-there-any-studies-showing-that-'dry-powder'-in-your-aa-actually-is-valuable/msg1988822/#msg1988822


bacchi

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Re: DON'T pay off your credit cards club
« Reply #25 on: May 03, 2018, 11:34:42 PM »
@secondcor521 has an epic thread in another forum from back in the days when interest rates were really high for savings accounts and CDs and i think he managed to do like 250-500k rolling balances and think about the ROI on that level of free money with a guaranteed return.

Ironically enough, I chronicled that story on a site named fatwallet, which has ceased operations.  I think it was over $500K at the most, and to address the concern of the poster immediately below boarder42, it was all stored in high yield savings accounts paying about 5% for about a year.  I don't recall the numbers but I think I cleared about $14K to $18K after the minimal fees.

Dayam. I was doing the same but with much less float. ING was paying out a good rate and the 0/0 offers were everywhere. I charged everything I could, "paid" my savings account, and the 0% card balance grew.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #26 on: May 04, 2018, 07:10:50 AM »
Secondcor, tomsang and MsSindy you are my heroes.

Dang, my efforts are feeble in comparison. Well done!

Still Being

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Re: DON'T pay off your credit cards club
« Reply #27 on: May 04, 2018, 07:43:08 AM »
Did you miss the part where I said our increased 401k withholding thanks to this strategy lowered our 2017 federal tax to $0.00?  That has already more than returned the $84 balance transfer fee we paid.  In multiples.  Many multiples.

This is a weak analysis. There is a deferred tax liability associated with pre-tax accounts, which may or may not end up being 0 depending on your situation in the future. Also, as long as the credit card balance remains the risk is still there and return not fully realized.

The thought behind this is good, just a little too emotional / brash in response to people who are just asking you simple questions.

talltexan

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Re: DON'T pay off your credit cards club
« Reply #28 on: May 04, 2018, 07:55:54 AM »
One other habit that's helped keep me current on this is setting all payments for credit cards on the same day of the month (requires a bit of finesse getting due dates synced up).

BlueHouse

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Re: DON'T pay off your credit cards club
« Reply #29 on: May 04, 2018, 08:48:14 AM »
Dang, my efforts are feeble in comparison. Well done!

Pizzabrewer,
Since you are able to manage the credit card dance, you may also be interested in Arebelspy's posts on selling tradelines.  Seems to be some money on the table for people who can juggle multiple cards.

author=arebelspy link=topic=66145.msg1356357#msg1356357 date=1482994662

boarder42

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Re: DON'T pay off your credit cards club
« Reply #30 on: May 04, 2018, 09:17:28 AM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected. 

fuzzy math

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Re: DON'T pay off your credit cards club
« Reply #31 on: May 04, 2018, 09:57:06 AM »
If someone wants to offer me 0% I'll take it. Have a couple months left on a Lowe's fridge. 2017 was a really weird year for us financially and would have left us with a crazy tax bill had we not utilized a couple more 0% cards (opened specifically for this). Maxed out the retirement accounts and lowered our tax bill significantly. Now trying to pay the Piper because I don't want revolving credit card debt. I need that space available for CC hacking :D

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tomsang

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Re: DON'T pay off your credit cards club
« Reply #32 on: May 04, 2018, 10:24:42 AM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected.

I was going down the tradeline route, but pulled out as we were doing multimillion dollar financing between home and business.  They were offering very sizable amounts for our $50k 20+ year credit cards.  I also would not want to lose those, but I hear that the credit stays with the report even if they shut down the cards.

I believe having Loc's provides way more liquidity if an opportunity pops up.  See previous posts.  I have made well in excess of $500k by using CC, LOC, and 401k loans over the years. 

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #33 on: May 05, 2018, 10:52:14 AM »
Did you miss the part where I said our increased 401k withholding thanks to this strategy lowered our 2017 federal tax to $0.00?  That has already more than returned the $84 balance transfer fee we paid.  In multiples.  Many multiples.

This is a weak analysis. There is a deferred tax liability associated with pre-tax accounts, which may or may not end up being 0 depending on your situation in the future. Also, as long as the credit card balance remains the risk is still there and return not fully realized.

The thought behind this is good, just a little too emotional / brash in response to people who are just asking you simple questions.

Yup maybe I was a bit too strident in my responses.  The internet, ya know?  It is frustrating getting hammered with criticisms that boil down to "really bad things can happen".  I'm pretty sure I'm aware of what things can happen and have the discipline to avoid them.

I'd argue it's not a weak analysis.  Borrowing post-tax money allowing us (greater dollar) pre-tax investments while deferring all federal tax liability for years, that's a win in my book.

And opportunities to borrow money for free aren't plentiful.  I'll take advantage of the ones offered.
« Last Edit: May 05, 2018, 11:03:39 AM by Pizzabrewer »

Well Respected Man

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Re: DON'T pay off your credit cards club
« Reply #34 on: May 06, 2018, 08:07:45 AM »
3. It helps to have a "cross-ruff" where you're moving balances around between three different banks. At any time, I have floating balances with two out of three banks, so there's always a card at $0 that's ready for the next move.

aka a bridge loan

secondcor521

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Re: DON'T pay off your credit cards club
« Reply #35 on: May 06, 2018, 10:47:15 AM »
3. It helps to have a "cross-ruff" where you're moving balances around between three different banks. At any time, I have floating balances with two out of three banks, so there's always a card at $0 that's ready for the next move.

aka a bridge loan

Heh, I see what you did there.

Phryne

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Re: DON'T pay off your credit cards club
« Reply #36 on: May 07, 2018, 04:52:06 AM »
Kudos!

I did this years ago when I first got a mortgage- my interest rate was 9% and I had a credit card with a $20k limit- Citibank would send you a cheque for 85% of your limit for zero cost @ 0% for 18 months which I deposited in my offset account (Australia) and used another card for day to day usage. 18 months later, I just payed the balance back. Today with much lower mortgage rates plus transfer fees which didnít exist back then, itís pretty much a wash.

Just last week I suggested to my husband that we find a 0% credit card for our upcoming solar panel purchase to smash out that cost quickly and not see a dint in our stash... I know itís a probably a phycological benefit at best, but hey, every bit counts!!

talltexan

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Re: DON'T pay off your credit cards club
« Reply #37 on: May 08, 2018, 08:24:33 AM »
You know, this thread appeared just as I'm trying to decide which direction to move:

In one hand, I have a post-tax investment account of roughly $20,000, and approximately $3,000 set aside in savings accounts

In the other hand, I have some debts that have accumulated to approximately $32,000:

$6,000 car loan (3% interest; $540 monthly)
$6,600 AC loan (0% interest; $160 monthly)
$1,180 that I owe my children (I pay them 1% of the balance every two months)

$4,000 of credit card balances for actively used cards that involve spending from the current month (this represents a sustainable amount of monthly spending for our household)
$16,600 of credit card balances that are currently at 0% (expiring between June 2018 and June 2019

It seems as though I ought to be able to manage that investment account (via the 4% rule) to sustain the debts I am describing, and perhaps slightly more. Thoughts?

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #38 on: May 18, 2018, 05:34:44 PM »
So I realized my new Amex Blue Cash card is 0% for 15 months.  I got it for the $250 bonus, but now I'm charging everything on it and just paid the minimum ($35) on the first bill.

I have at the moment over $25k of 0% money available to me, of which I'm only using about $16k. I need to increase those cc balances, ASAP.

I'm the anti-Dave Ramsey.

Toad

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Re: DON'T pay off your credit cards club
« Reply #39 on: May 20, 2018, 10:44:56 PM »
@secondcor521 has an epic thread in another forum from back in the days when interest rates were really high for savings accounts and CDs and i think he managed to do like 250-500k rolling balances and think about the ROI on that level of free money with a guaranteed return.

Ironically enough, I chronicled that story on a site named fatwallet, which has ceased operations.  I think it was over $500K at the most, and to address the concern of the poster immediately below boarder42, it was all stored in high yield savings accounts paying about 5% for about a year.  I don't recall the numbers but I think I cleared about $14K to $18K after the minimal fees.

The game changes over time, though.  That one is no longer feasible, but there are others out there.  When those go under, someone else will find another thing to exploit.

Definitely not feasible on that scale...but I stumbled upon this beauty:

https://www.doctorofcredit.com/insight-5-apy-prepaid-card-5000/

5% return on up to 5k, and it appears you can have up to 4 accounts...so for 1 year with 20k floating on credit cards into the 5% savings account --> 1k net gain...this is very tempting since I currently have 13k I can float at 0% for ~14 more months.  Never really messed with this before...something to think about for sure.

talltexan

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Re: DON'T pay off your credit cards club
« Reply #40 on: May 21, 2018, 08:09:25 AM »
I went ahead and rolled about $1,900 to a chase card I already had. 3% fee, but no interest for 46 weeks. It's a lower rate than my car or my mortgage.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #41 on: May 21, 2018, 12:37:35 PM »
I went ahead and rolled about $1,900 to a chase card I already had. 3% fee, but no interest for 46 weeks. It's a lower rate than my car or my mortgage.

Ex-fucking-actly! 

I will say that there are better deals out there (0% and 2% transfer fees) but I quibble.

Lenders are offering money at 0% and there are those (even here) who will warn against the evil cc companies.  Use what they offer, I say.

Well done.

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #42 on: May 21, 2018, 12:50:55 PM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected.

Dude it's not an either/or. 

It's money being lent at 0% interest.  All you gotta do is not fuck up.  As the founder of the "Don't pay of your mortgage thread" I'm surprised you're not on board with borrowing free money.

boarder42

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Re: DON'T pay off your credit cards club
« Reply #43 on: May 21, 2018, 01:00:52 PM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected.

Dude it's not an either/or. 

It's money being lent at 0% interest.  All you gotta do is not fuck up.  As the founder of the "Don't pay of your mortgage thread" I'm surprised you're not on board with borrowing free money.

its not secured for a very long amount of time.  and by not "fuck up" you mean not have the credit card companies change their policy on how youre borrowing and stop allowing 0% balance transfers or not have the equities you're investing in take a 30% hair cut all while the 0% balance transfer goes defunct.  too many variables for very little gain here.  its not as simple as saying make the minimum payment each month and you'll come out ahead. 

With all that being said if you're so wildly confident in this why arent you running up 250k - 500k in 0% debt like secondcor did - the answer is b/c there isnt a secure enough investment vehicle to make it worth it right now.  you're playing with fire to make pennies, if you arent willing to scale it for fear of losing it all then its probably not a sound long term strategy. 

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #44 on: May 21, 2018, 01:20:21 PM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected.

Dude it's not an either/or. 

It's money being lent at 0% interest.  All you gotta do is not fuck up.  As the founder of the "Don't pay of your mortgage thread" I'm surprised you're not on board with borrowing free money.

its not secured for a very long amount of time.  and by not "fuck up" you mean not have the credit card companies change their policy on how youre borrowing and stop allowing 0% balance transfers or not have the equities you're investing in take a 30% hair cut all while the 0% balance transfer goes defunct.  too many variables for very little gain here.  its not as simple as saying make the minimum payment each month and you'll come out ahead. 

With all that being said if you're so wildly confident in this why arent you running up 250k - 500k in 0% debt like secondcor did - the answer is b/c there isnt a secure enough investment vehicle to make it worth it right now.  you're playing with fire to make pennies, if you arent willing to scale it for fear of losing it all then its probably not a sound long term strategy.

Well the main reason I don't take out $250k to a half mill in 0% cc debt is because I don't have the credit rating/income/borrowing power to qualify for those amounts.  I'm keeping this (necessarily) in the realm of what I can pull off, which makes sense at my income level and wealth.  By utilizing this strategy I lowered our federal tax to $0 (zero dollars) and received a tax refund of $1100 from the state.  Maybe in your world this is small potatoes (congrats to you) but this is a major win in my insignificant situation. 

But none of that would have been possible without the 0% cc debt.

And, BTW, in addition to raising our retirement balances, we've managed to sock away enough in "emergency" funds to pay off the balances at a moment's notice if needed.  So I count our risk at almost nothing.

boarder42

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Re: DON'T pay off your credit cards club
« Reply #45 on: May 21, 2018, 01:39:30 PM »
way way way more money in selling tradelines than doing this much higher risk balance transfer maneuver.  I'm all about taking smart calculated risks but even this isnt worth the effort IMO.   If something like Secondcor did was still available i'd be interested b/c thats real money thats protected.

Dude it's not an either/or. 

It's money being lent at 0% interest.  All you gotta do is not fuck up.  As the founder of the "Don't pay of your mortgage thread" I'm surprised you're not on board with borrowing free money.

its not secured for a very long amount of time.  and by not "fuck up" you mean not have the credit card companies change their policy on how youre borrowing and stop allowing 0% balance transfers or not have the equities you're investing in take a 30% hair cut all while the 0% balance transfer goes defunct.  too many variables for very little gain here.  its not as simple as saying make the minimum payment each month and you'll come out ahead. 

With all that being said if you're so wildly confident in this why arent you running up 250k - 500k in 0% debt like secondcor did - the answer is b/c there isnt a secure enough investment vehicle to make it worth it right now.  you're playing with fire to make pennies, if you arent willing to scale it for fear of losing it all then its probably not a sound long term strategy.

Well the main reason I don't take out $250k to a half mill in 0% cc debt is because I don't have the credit rating/income/borrowing power to qualify for those amounts.  I'm keeping this (necessarily) in the realm of what I can pull off, which makes sense at my income level and wealth.  By utilizing this strategy I lowered our federal tax to $0 (zero dollars) and received a tax refund of $1100 from the state.  Maybe in your world this is small potatoes (congrats to you) but this is a major win in my insignificant situation. 

But none of that would have been possible without the 0% cc debt.

And, BTW, in addition to raising our retirement balances, we've managed to sock away enough in "emergency" funds to pay off the balances at a moment's notice if needed.  So I count our risk at almost nothing.

if you're storing enough "emergency" funds to pay this off i cant imagine this is close to worth the risk - vs just investing your emergency fund which would create the exact same situation.  you're keeping a large enough sum of money on the sidelines to pay off all the debt you have - so you're not actually leveraged at all.  you're just choosing to not pay down credit cards with money you have sitting around b/c you dont have to.

if i have 20k in disposable income to invest and 20k in credit card debt available to me and i do

1. invest my 20k and keep my CC debt as my E fund

or

2. keep 20k in an "e Fund" and run up 20k in CC debt at 0% - and invest that 20k

i have the same networth and same ability to pay for an upcoming events in either situation.
« Last Edit: May 21, 2018, 01:41:57 PM by boarder42 »

Pizzabrewer

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Re: DON'T pay off your credit cards club
« Reply #46 on: May 21, 2018, 01:52:15 PM »
Clearly you're not grokking what I'm saying.

I will ask, though, what is the "risk" you keep harping on?


boarder42

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Re: DON'T pay off your credit cards club
« Reply #47 on: May 21, 2018, 02:05:18 PM »
Clearly you're not grokking what I'm saying.

I will ask, though, what is the "risk" you keep harping on?

you said you have enough money in an EFund to pay off your cards - yet you're claiming you have all of this "leverage" out there that allowed you to max all these accounts and get these great tax breaks - thru this CC debt.  which could be how you got there but if your EFund is large enough to cover the CC debt you could have just as easily allocated that money towards it - what is gained by keeping money in you Efund over paying down these debts.  and the risk is for some reason your bank F's up and you're stuck with a bill for all that interest thats been running up all so you could arbitrage maybe 1% interest on 20k sitting in an efund earning some minimal bank interest?

v8rx7guy

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Re: DON'T pay off your credit cards club
« Reply #48 on: May 21, 2018, 02:10:57 PM »
via Imgflip Meme Generator

Bonus points if you read this in "Gru voice" in your head
« Last Edit: May 21, 2018, 02:24:19 PM by v8rx7guy »

boarder42

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Re: DON'T pay off your credit cards club
« Reply #49 on: May 21, 2018, 02:25:18 PM »
via Imgflip Meme Generator

that sums up what i had read pretty well. 

OPs strategy works in very minute situations

you arent going to max tax advantaged space this year - but you're going to have some major windfall or increase in earnings next year that can allow for you to cover this year's max and next years.  i dont really see any other way that this is actually advantageous in the long run.   esp if you're keeping the cash sidelined to pay off the debt.